Yes, as SursumCorda points out, there are good reasons to make LLCs easy to incorporate, particularly in order to encourage small businesses. The problem is that shady characters of any stripe or flag can take advantage of these LLCs – just like a few guys took advantage of American hospitality to go to flight school and then take down a building with a jetliner. I think Sursumcorda’s concern that action on this point will mostly hurt the little guys is justified.

The article, as far as I understood it, has nothing to do with legitimate US businesses incorporating in another state for tax reasons. It doesn’t need to separate out that category because it pretty much neglects it. Of course, it’s the combination of low taxation and loose laws that make the three states mentioned so attractive for launderers, and make US imprecations against countries that have low taxes because they know how to balance their budget all the more irritating.

To change the subject from that of the article, yes, many companies have their overseas offices in Ireland. The reason is the “Double Irish” and the “Dutch Sandwich,” which makes overnight shipping look like pocket change. Google uses it too. Dilbert sums it up quite nicely.

Though, now that I’ve read the article, I see that they are talking about just US companies incorporating in other states, but rather shady types from other countries. I think to be fair, you would need to separate those two categories.

I know about the tax reasons for Nevada (where Microsoft is incorporated) and Delaware, where nearly every other business is. Microsoft ships its monthly box of cds to their vendors from Ireland. I assume it has something to do with getting around the US’s export restrictions on encryption algorithms, but it still seems pretty weird to me (and can it really be worth the expense of overnight shipping?).

Shell and shelf companies do serve legitimate purposes. They provide a quick and cheap way for entrepreneurs to jump into business and create jobs. Businesses can use them to protect trade secrets. Politicians or other public figures may use a shell company to hold their home so that people with ill intent have a harder time locating them.

LLCs may be vulnerable to being used as shell companies, but they’re also important for small businesses and entrepreneurs. I hope we don’t get another case of destroying the little guy in an effort to get the big crooks.